Exclusive: Boeing 787 Output Hiccups Reemerge At Assembly Sites

The
Boeing logo is seen on a Boeing 787 Dreamliner airplane in Long
BeachThomson
Reuters

By Alwyn Scott

NEW YORK (Reuters) - Boeing has pushed some factory work on the
787 Dreamliner to the uncovered tarmac outside its assembly plant
in Washington state in an effort to keep churning out the popular
plane at a rate of one every three days, according to people with
knowledge of the situation.

At the same time, the sources said, at least 16 Italian-made
fuselage sections for the 787 have stacked up in a Boeing hangar
in Wichita, Kansas, rather than being shipped directly to the
factory, a sign of changes in the production process.

The unusual shifts, details of which have not been previously
reported, are partly a response to unfinished jobs building up as
787s move along the assembly line and partly an effort by Boeing
to speed up the factories.

Boeing spokesman Marc Birtel said outside work is not unusual
when unfinished jobs build up along the assembly line, and is not
unique to the 787 line. He said the company has reduced the
backlog of jobs since January, though the sources said the
situation has gotten worse.

The company is trying to streamline 787 production and cut costs
while hitting its target of delivering a record 110 Dreamliners
this year, up from 65 in 2013.

Investors are counting on smooth Dreamliner production to lift
Boeing's stock, which has fallen 12 percent this year on fears
that production could falter as Boeing speeds up the factories
and introduces new models, and that global demand for new
airplanes will taper off after years of heady growth.

Boeing stock was up 0.13 percent, to $119.99, in afternoon
trading on the New York Stock Exchange.

In some sense, the production problems reflect the aerospace
sector's record-setting strength. Order books at Boeing and rival
Airbus are bulging, with about 10,000 planes valued at more than
$700 billion combined. Both companies are speeding up output of
their best-selling models.

The 787, an innovative, fuel-saving long-range jet, the most
popular version of which carries a list price of $257 million,
has garnered 1,057 orders since it hit the market in 2004. Most
are made at Boeing's factory in Everett, Washington, with a
smaller line in North Charleston, South Carolina.

But North Charleston also puts together midbody fuselage sections
from pieces shipped by Alenia, a unit of Italy's Finmeccanica .
North Charleston workers install wiring and other components and
ship the finished pieces to Everett or their local assembly line
for final assembly.

The production process did not previously involve storage of
midbody section pieces in Wichita, according to the sources.
Boeing sold its operations there in 2005, and has put the last of
its facilities there up for sale.

Boeing said the rerouted fuselages are stored for a couple of
weeks in Wichita to ensure they are available when needed in
North Charleston. No assembly work is being performed in Wichita,
and the rerouting is due to be phased out soon, the company said.

Meanwhile, the 787 assembly line still has a large volume of
unfinished jobs, according to people familiar with the
production.

The jobs, known as "traveled work" because they are moved to the
next part of the assembly line, surged early this year when
Boeing increased 787 production to 10 a month from seven. Boeing
stock dropped when the problems surfaced, and the company hired
back hundreds of contract workers it had laid off to attack the
problem.

In May, Boeing said it had largely eliminated traveled work and
gave South Carolina workers a bonus for cutting the backlog.

But since then, Boeing has dispatched teams to complete
installation of galleys, lavatories, seats, stowage bins and
carpet while the planes are parked on the flight line, according
to two people with knowledge of the situation. The work is
normally performed in the factory.

Employees at the plant in Everett are working mandatory 10-hour
days and weekends to keep up, said the people, who were not
authorized to speak publicly about the company.

One source said several hundred workers are assigned to the teams
doing final assembly after planes have left the factory.

"We've had hundreds of those guys coming to the flight line
almost on a round-the-clock basis to perform all the traveled
work," said one of the sources.

Despite the problems, Boeing has met its production targets,
delivering 30 787s in the latest quarter and 56 so far this year
through July, including a new stretched version of the plane.

"While it’s not optimal, it happens on every airplane program and
is certainly not unique to the 787," said Birtel, the Boeing
spokesman.

(Editing by Christian Plumb and Douglas Royalty)

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